All eyes are on New Hampshire today as voters go to the polls for the first primary of the season – and we all get the promise of vote counts, sans coin flips.
And while we are not political junkies – we’ve been watching the Granite State as well – but for longer lasting trends that will persist (or not) no matter who wins the White House.
As the Merchants’ Eye View: New Hampshire state featured in our “Store Front Business Index” we’ve taken the temperature of shops and service providers that line the main streets of New Hampshire’s local communities.
The macro picture is … mixed, at best. The good news is when stacked against 2007 – New Hampshire’s small business are growing. When stacked against the rest of the NE region and nation as a whole – that growth looks sluggish as it trails other states.
So what gives?
We’re confident we’ve given you the best bird’s eye view of New Hampshire data has to offer in our Store Front Index – but there is only one real way to get a feel for the feeling on the street – and that is to hit the streets
And so that is exactly what we did. Braving falling snow, over a dozen presidential campaigns and the entire national press corps descending on a state that is only 9.350 square miles in total (1/30th the size of Texas) – PYMNTS hit the means streets of New Hampshire.
What We Learned On The Road: Part I
There were several lessons on offer.
The state road system of New Hampshire was not built to handle over a dozen presidential campaigns and the entire press corps taking up residence for a weekend – meaning at various points in the day it was doubtlessly faster to walk the 30 or so odd miles between Manchester and Concord.
MSNBC employees have apparently all been issued special phones, tablets and laptops that only charge in Starbucks, meaning no matter what Starbucks one goes into in New Hampshire in advance of the primary – he or she runs even odds of having to wait for Rachel Maddow to finish charging her iPhone first.
New Hampshire state residents who stand still in public places too long – particularly in the state’s bigger cities – tend to get interviewed by journalists. They find it bewildering since it only happens for two weeks a year, every four years, and then it ends as abruptly as it starts.
These may seem like random lessons for a Store Front Business Index – but in fact these were the first and most common refrains we heard over the course of two days we spent in the state hitting everywhere from Salem to Laconia; from Manchester to Lebanon, from Concord to Portsmouth — and all the way back to Boston just in time for another blizzard and a report from the field.
All in, we chatted with 46 “store front” merchants that sell or service just about anything you can imagine. And while universal touch points of agreement were rare, they tended to exist along the three lines already laid out. They like the attention, and the bump in business is nice – but wish it were paced a bit better such that roads weren’t quite so shut down and they are running out of interesting things to say to reporters.
We can’t say we weren’t part of the problem exactly – but we can say we asked them better questions than most of the drive-by pollsters were shouting. In fact we asked every one of these businesses the same basic lineup. How long they’d been in business. How well — in terms of sales growth, employee base and core expansion — do they think their business is doing. How have those things changed for them in the last five years.
Some merchants answered us generally or on the fly. Others – mostly in the restaurant space – waved their hands frantically at their packed seating areas as a form of answer to all inquiries.
But some took the time to answer – on the record – about where they are and where they hope to be going.
What We Learned On The Road Part 2
Ian Laurent, Owner Candia Road Collectibles, Manchester, NH
Candia Road Collectibles in Manchester is an unassuming 6,000-square-foot space that normally has tremendous parking availability.
“I am pretty sure all those people are not here to buy antiques,” Laurent noted wryly. “I don’t complain though – a surprising number of people stop in and pick up something – it’s the magic of a collectibles shop.”
And Candia sells a little bit of everything — jewelry, furniture, vintage clothing, china, pottery figurines and hard to classify items like antique washing tubs and the brightest lime green appliance set the ’70s had on offer were all things stocking the shelves when we visited, though those items are prone to change as stock varies.
Which, Laurent notes, means the last several years have been good for his business, though how the “good” is being parsed out matters.
“I would say eight years ago definitely, and five years ago still we were definitely doing better acquiring stock than selling it. We did great business with people looking for secondhand furniture – kitchen tables were the items I couldn’t keep in the store for multiple years. When times are tough, I think secondhand and vintage stores are a really popular option and we would see people from as far south as Boston coming our way. For us, the bigger opportunity was in picking up collectibles, because frankly people were more willing to part with them.”
The average customer and what they are seeking has changed some in the last few years, Laurent noted, with more people looking for antique and decorative items than household staples – but that choppiness persists.
“I think there have been false starts where we thought, ‘Oh, this is turning over’ and it didn’t really. We would see sales inch up near the holidays, but then fall right back off. This year is a little weird because all of this (he said, gesturing at his full parking lot) is going on. I’m just one store and so I’m optimistic — you have to be, but I’m cautious at this point.”
But, he noted, he’s cautious by nature, joking that in antiques you kind of have to be.
“I think right now things are looking better than they have, but I’m not ready to bet on a banner year yet.”
But, he notes, a solid year is what he’s achieved for the last several — and his business is built to last on solid and not spectacular years.
Kristin Aldrich, Vivo Salon And Day Spa, Lebanon, NH
Tucked into the mountainous region of the state, Lebanon, NH, sits adjacent to Hanover – home of Dartmouth College – and the state of Vermont – home of Bernie Sanders. It is picturesque and, according to Aldrich, has been mostly spared the madness that reigns in the Southern part of the state.
“We’ve seen our share of candidates, but I have friends in Concord who have stopped leaving their house for fear of meeting another presidential candidate.”
Aldrich conceded she was joking – but did note that the presidential election points to a bigger problem she has noted in her decade-plus in operation in New Hampshire: seasonality.
“We have beautiful summers and a majestic leaf season. However, winter and a muddy spring don’t attract as many visitors. Our proximity to the college and the medical center even that out some, but it is challenging catching the balance between having the right amount of space for the busy seasons and not having too much overhead when we are lighter.”
But, she noted, the changing trends in how people are relating to spas have definitely been an upswing in her business.
“When we first were starting out – spas treatments were something that had been an occasional good – a treat that someone bought as a gift for themselves or someone else. We would have a very big press in January from all the messages given out,” Aldrich said. “People have less occasional interaction with us now, and we are seeing far more habitual interaction from our user base. So they don’t come in always to get a full set of spa treatments – that is still occasional – but they are coming in for manicures or pedicures bimonthly.”
As for her business’s biggest challenge going forward, Aldrich said that she had no specific concerns, but that uncertainty remains a generalized worry.
“We’ve seen our sales increase, our recurring customer base grow – especially in the last two years. But we’ve seen more spas open, too, especially in this area which is getting more developed. Knowing what the right growth balance is and staying competitive are our biggest challenges going forward.”
Praveen Kathpal, Quick Stop, Allenstown, NH (just outside Concord)
Praveen Kathpal took ownership of the Quick Stop Convenience store from his cousin in July of 2008 — a few weeks after graduating from Northeastern, and a few weeks before the financial crisis.
“I remember looking at my wife in 2009 and telling her this might not have been a good time to buy a business.”
But, as it turns out, it was a great time to have bought a convenience store.
“We have seen our sales go up every year for the last eight – we opened a food counter with hot dogs, sandwiches – very inexpensive $2.50 for two hot dogs, or a half sandwich – and we are sold out on food every day by noon.”
And yet of all the merchants we spoke to, Kathpal was the least satisfied, despite reporting the best growth of anyone we spoke to. Because he doesn’t want his lunch counter to sell out every day by noon — he wants to renovate and expand his store, particularly the popular food counter. But he can’t.
“There is no money – and my business is profitable but to make renovations of this size, it’s just not possible. So I don’t grow, I make less money than I should.”
Kathpal’s complaints were not unique, though he was one of the few merchants who wanted to state, along with his name, that financing is a problem he faces because of lack of access to lending products for expansion.
He was also far from the only merchants to bemoan how difficult it is to grow — with many noting that small banks they used to work with were either defunct, or now consolidated and less eager to lend to small businesses. And while a few noted awareness of alternative lending products for small business — most demurred, noting they were either “too expensive by interest” or “a little too exotic.”
And Then There Were The Surprises
While we had questions for the merchants, there were also a surprisingly consistent number of questions for us, once we acknowledged we worked for the financial press and were particularly interested in payments.
For example, many merchants asked us why in the world people kept trying to sell them on EMV, since they were never, ever going to adopt it. While explanations varied, the manager of an ice cream shop in Manchester gave it the best short summary.
“There is a not a single customer who cares if we take EMV, which means we will never make an additional sale because of it. But it costs money and we don’t have money to spend on things that do not increase our sales.”
That same manager noted that while card fraud is a concern, the reality is quite different.
“We sell ice cream sundaes and cones. Our top price is like $10, so the odds that we are going to be on the hook for much more than $50 are small. The upgrade costs a lot more than that and we don’t see that many. In fact I’m not sure we’ve ever had one.”
Merchants also wondered at the general surprise they tended to get from reporters when they expressed a lack of political affiliation — with a stunning majority (33 of the 45 we spoke to) identifying as independents. Their reasoning for that designation was often similar: most politicians (regardless of party) are not business owners, though they talk a lot about them. There is not a wide feeling of confidence among New Hampshire’s entrepreneurial class that career politicians understand that much about how running a small, tightly margined business works.
But the question we heard the most – but perhaps one that should be least surprising – was the one about why people like us only show up to ask them questions every four years; more than a dozen business owners noted they are open year round, but only ever talk to journalists in the first few weeks of leap years.
But luckily, for that question, PYMNTS now has an answer: our Storefront Business Index, published quarterly. Because the merchants of New Hampshire are right – the vitality of those small businesses whose store fronts drive the health of their local communities is worth measuring more than once every four years.
Beyond The Primaries, New Hampshire Is Doing … Just OK
The presidential primary may dominate New Hampshire’s news today, but longer-lasting trends are in place that transcend who takes the vote today or even the White House come November.
That would be the health of the businesses that really drive the local economies: the so-called “store front” businesses that line the main streets and side streets of those local communities.
Speaking broadly, those businesses, as measured through the end of 2015 (and there, obviously, is a “rearview mirror” component here), have done well. Looking at the measures of health for all 3.4 million of them tracked in the U.S., they’ve actually done better than well. According to the CAN Capital Store Front Business Index (SFI), they’ve grown faster than the U.S. economy overall, no mean feat given the consistent headwinds of worries over the stock market and the first rate hike in over nine years, courtesy of the Federal Reserve.
Theoretically, such headwinds should cause consumers — and the small businesses that serve them — to pull back a bit on the purse strings. For store fronts, that would mean no growth, but that has not shown up in the numbers, where the most recent reading showed the SFI at 112.9, indicating nice expansion.
But, as always, the devil is in the details.
And, on a state-by-state basis, New Hampshire falls a bit short — not a slide, not a recession, but growth that pales a bit in comparison to the broader indices.
The health of store front businesses in the state itself indexed at 106.7, which shows some growth but less than that experienced overall by their counterparts across the U.S. — and even less than those in the Northeast region.
So, not bad but not great, measured against a smaller arena, at least speaking geographically.
And yet, there’s a troubling trend here and one that may give a nod to some of the issues roiling the state into primary season and beyond, regardless of party affiliation.
The 106 number just quoted, at the second quarter of 2015, is lower than the 109.3 seen at the same period in 2014, and all of that data, of course, shows growth off the 2007 starting point (where, for our purposes, the index stood at 100).
One telltale for the overall health of store fronts is the growth in number of establishments, both historically and looking forward. That’s been slowing, at 2 percent overall, and overall has been noted to be the smallest contributor to growth. According to our data, the greatest growth, in terms of actual business growth, has been, and will remain, in the Mountain region and also the South — nary a blip from New England on that front, which indicates that growth will come from employee expansion at existing store fronts and wages. On the former point, we may have to see a tempering of stock market volatility and perhaps even job growth (which has also slowed a bit nationwide) until hiring surges. On the latter point, rate hikes may or may not mean inflation is kept in check, and if not, then wages will have to keep pace.